Question

A company has current assets (cash, property, inventory, and accounts receivable) of $200,000 and current liabilities (taxes, loans, and accounts payable) of $50,000. How much can it borrow if it wants its ratio of assets to liabilities to be no less than 2

Answer 1

Based on the current assets and the current liabilities, the amount that can be borrowed to about exceeding the ratio of assets to liabilities is $100,000.

How much can the company borrow?

The ratio of assets to liabilities is:

= Assets / Liabilities

If the value that can be borrowed is x, the formula would be:

2 = (200,000 + x) / (50,000 + x)

x = $10,000

Find out more on the ratio of assets to liabilities at https://brainly.com/question/2686492

#SPJ1

Answer 2

The company can borrow $100,000 if it wants its ratio of assets to liabilities to be no less than 2.

What is the ratio of assets to liabilities called?

The ratio of assets to liabilities or liabilities to assets is called the debt-to-asset ratio.

The debt-to-asset ratio shows the degree to which assets are funded by debts, the level of the financial risk faced by the company, and how capital-intensive a company is.

Data and Calculations:

Before Borrowing:

                                      Assets           Liabilities

Amount                      $200,000         $50,000

Debt ratio                        4            :          1

After Borrowing:

Amount                     $300,000       $150,000 ($50,000 + $100,000)

New Debt ratio               2           :            1

Thus, the company can borrow $100,000 if it wants its ratio of assets to liabilities to be no less than 2.            

Learn more about the assets to debts ratio at https://brainly.com/question/21406342

#SPJ1